Construction Equipment Targeted as Major Source of Air Pollution; Focus of Emissions Reduction Mandate
AGC Responds to Call for Industry to Modify or Replace In-use Fleet
Regulators should “adopt a regulatory regime that will clean up existing [in-use] construction equipment,” according to a new report by the Union of Concerned Scientists (UCS). The report supports a draft California Air Resources Board (CARB) rule that would require construction equipment owners and operators to significantly cut engine emissions or buy new equipment. AGC points out the many problems contractors would face if forced to assume the entire cost of modifying or replacing their fleet and highlights what AGC is doing to support voluntary diesel retrofit efforts and initiatives.
Emissions from construction equipment are harmful to our public health and economy, according to a new report by the Union of Concerned Scientists (UCS). The UCS report attempts to analyze and quantify the effects of construction pollution on the “well-being of California residents”; a first-of-its-kind study, according to UCS. It blames a “staggering” number of deaths and other illnesses, as well as work and school absences on air pollution from construction equipment used throughout the state – concluding that combined public health costs are $9.1 billion per year.
The health effects quantified in the report are based on peer-reviewed epidemiological studies used by both the EPA and CARB to evaluate the benefits of reducing air pollution, according to Don Anair, author of the report and a Clean Vehicles Engineer at the University of California-Berkeley. Anair believes “equipment owners need… to start investing in clean, affordable technology available today to reduce costly construction pollution.”
California’s Proposes Limits on Construction Equipment Emissions; Establishes National Model
Earlier this month, CARB proposed a new rule that would require owners and operators of older construction equipment with 25 horsepower and larger engines to retrofit, repower, or replace the equipment beginning in 2009. This rulemaking effort is aimed at reducing diesel particulate emissions in the state by 85 percent. CARB's proposal does not indicate the costs of complying with the emission standards.
Specifically, the proposed rules would establish annually declining fleet average emissions rate targets for particulate matter and nitrogen oxides. All fleets would be required to meet the targets for particulate matter (PM). Large- and medium-sized fleets would be required to meet the nitrogen oxides (NOx) target as well. The proposal also would establish a five-minute idling limit for the equipment beginning in 2008.
Public workshops on the plan will be held this month and the board is expected to vote on the plan next spring.
State air officials estimate that 70 percent of California’s construction equipment is currently not covered by federal and state regulations because it is too old. EPA adopted federal rule in 2004 that require cleaner-emitting engines in all new construction equipment, starting with model-year 2008 equipment. But those federal rules do not cover existing engines (i.e., in-use equipment) and will not be fully phased in until 2014. (Although EPA sets and enforces emission standards for new diesel engines, EPA lacks the statutory authority to retroactively strengthen the standards for existing, in-use engines.) Given the prevalence and longevity of older diesels in operation today, air officials point out that it will take many years before the bulk of the construction fleet meets the most stringent federal engine emissions standards.
California is the only state that has legal authority from U.S. Congress to enact construction engine exhaust standards that far surpass the emissions rules set by the federal government. Moreover, California is the only rulemaking body that has the power to retroactively regulate in-use construction equipment. All other states can opt-in to California’s more aggressive rules – but states must adopt, implement and enforce Calif.’s program identically and in its entirety. States struggling to meet EPA’s more stringent national ambient air quality standards (NAAQS) for particulates and ozone will likely look to adopt any California rule that becomes final.
AGC’s Response to Fleet Modification, Early Retirement Mandates
AGC works to educate policymakers and environmental advocates about the high cost of construction equipment, its 25-30 year useful life and the difficulty in obtaining pollution-reducing devices, all of which makes it burdensome for contractors to retrofit existing equipment or to purchase new equipment. And, under current law, it is legal to continue to operate this equipment “as is” until the end of its useful life. Still, many groups support fleet modification and early retirement mandates, as well as the use of contract specifications that ban contractors from bidding on public works projects unless their equipment meets stringent emissions standards.
The following "talking points" demonstrate why these practices are likely to have a negative economic impact on construction contractors – particularly small businesses – and what AGC is doing to support voluntary diesel retrofit efforts and initiatives at both the national and local levels.
1. Equipment currently owned by the construction community is legal to operate “as is.”
- The UCS report blames the construction industry for using older equipment that, in some cases, pre-dates federal and state engine emissions rules.
- KEY FACTS TO CONVEY—
- All equipment currently in-use met any applicable federal and state engine emission rules at time of purchase.
- It is legal for the construction industry to continue to operate this equipment “as is” till end of its useful life.
Construction equipment lasts 25-30 yrs and is a HUGE investment.
2. It is extremely expensive to retrofit construction equipment.
- The UCS report states that “cost-effective technology solutions are available.”
- KEY FACTS TO CONVEY—
- As an example, diesel particulate matter filters currently cost between $5,000 and $10,000, and can be installed only on certain machines with engines built after 1995.
- Some retrofits are sensitive to fuel that contains high levels of sulfur.
- The cost of repowering a piece of equipment depends on the make and model of the machine. For instance, the cost of repowering a single engine scraper tops out at approximately $120,000.
3. Diesel retrofit mandates would put many construction firms out of business.
- The UCS report call for CARB to “adopt a regulatory regime that will clean up existing construction equipment” via retrofit and fleet turnover requirements.
- KEY FACTS TO CONVEY—
- Engine retrofit and fleet turnover requirements that place the financial burden of purchasing emission reduction technologies or new equipment on contractors are a major concern to the construction community. Such mandates would (1) shrink the business market for a construction company with a fleet of older diesel equipment, (2) devalue the company’s assets, and (3) adversely affect its financial statement.
- Construction companies are low-margin businesses that are worth the equipment they own. Any government action that would render a company’s fleet obsolete would wipe its balance sheet to zero overnight. Such action would also end that company’s ability to borrow money, to bid work and to bond work.
- Small businesses typically own older equipment and do not have the ability to finance equipment upgrades on their own. Retroactive equipment requirements would, therefore, shut small business owners out of the business market.
- AGC is opposed to any regulatory regime that would devalue a company’s equipment or undermine the competitive bidding process (and restrict competition) by discriminating against contractors on the basis of their existing equipment.
4. There are limited retrofit technologies available for off-road diesel applications.
- The UCS report states that “there are technology options available to clean up these existing machines.”
- KEY FACTS TO CONVEY—
- Currently, there are few technologies that are verified (by either EPA or CARB) for use on off-road diesel applications. In fact, not all construction equipment is “retrofitable.” In many cases, the only way to reduce emissions from Tier 0 or Tier 1 equipment is to completely re-power the machine with a new engine because a verified retrofit device does not exist. This is very expensive (as discussed in #2 above) and not physically possible on some equipment.
- EPA’s complete “Verified Retrofit Technologies” chart is online at http://www.epa.gov/otaq/retrofit/retroverifiedlist.htm. AGC has been working hard to dispel the myth that on-highway retrofit technologies can be easily transferred to off-road applications.
- The Diesel Technology Forum published a report in 2003 that explains the unique challenges associated with retrofitting off-road equipment. The report is online at http://www.dieselforum.org/resources/dtf-publications/diesel-powered-construction-farm-mining-equipment-essential-to-economy-clean-air/.
5. AGC continues support voluntary diesel retrofit efforts and initiatives at both the national and local levels.
- The UCS report gives the impression that the construction community must be forced to retrofit, stating that “only statewide regulations can achieve the reductions in construction equipment pollution needed to truly protect public health.”
- KEY FACTS TO CONVEY—
- AGC has worked with a variety of stakeholders to…
- Identify appropriate diesel retrofit incentives
- Secure federal funding for diesel retrofit
- Craft and promote a federal tax incentive
- Inform fleet owners of grant opportunities
- Since the inception of EPA’s Voluntary Diesel Retrofit Program, AGC and EPA have been working together to identify ways to reduce emissions from in-use construction equipment and, in particular, to assess voluntary diesel retrofit “incentives” that would appeal to the construction industry. This joint effort resulted in a first-of-its-kind EPA report, Emission Reduction Incentives for Off-road Diesel Equipment Used in the Port and Construction Sectors (May 2005), that looks at retrofit from the contractor’s perspective and relies on significant industry input.
- The “incentives” report (see above) has contributed significantly to the work currently being performed by the Clean Diesel Retrofit Work Group, a federal advisory group organized by and reporting to EPA, and charged with providing guidance and recommendations to EPA on strategies for reducing emissions from in-use off-road diesel equipment. AGC continues to serve as the co-chair of the Clean Diesel Retrofit Work Group.
- On the legislative front, AGC joined Senators Hillary Clinton and James Inhofe in a successful effort to include appropriate funding for diesel retrofit in the new federal highway bill. Congress agreed to make Congestion Mitigation and Air Quality (CMAQ) program funds available for the retrofit of off-road diesel equipment used to construct the projects that the bill funds.
- AGC also joined Senator George Voinovich (R-Ohio), Senator Tom Carper (D-Del.), and Senator Hilary Clinton (D-NY) in a successful effort to include the Diesel Emissions Reduction Act (DERA) in the comprehensive energy bill that Congress passed. DERA authorizes $1 billion in federal grants and loans over the next five years for diesel retrofit. The eligible fleets include both public and private fleets.
- AGC is seeking to modify the federal tax code to provide a financial incentive for contractors to retrofit their existing diesel equipment. Allowing contractors to expense (immediate write-off) the cost of modifications to existing equipment would provide a direct incentive for such modifications. It also would increase demand for emissions control devices, and to that extent, encourage emissions control manufacturers to provide more options.
- AGC continues to inform its members of federal/state grant opportunities and remains very active in almost all of the Clean Diesel Collaboratives that have formed across the country.
- To date, several AGC Chapters and member companies have won EPA grants for innovative diesel emission reduction projects in recent competitions lead by EPA’s National Clean Diesel Campaign.
- In the near future, AGC and EPA plan to jointly release a first-ever research paper that identifies low-cost ways to contactors to reduce diesel emissions.
For More Information—
The full UCS report, titled Digging Up Trouble: The Health Risks of Construction Pollution in California, is available online at http://www.ucsusa.org/clean_vehicles/california_driving/digging-up-trouble.html.
CARB’s proposed rules are online at http://arb.ca.gov/msprog/ordiesel/ordiesel.htm.
For more information on California’s clean-air initiatives, contact AGC of California’s John Hakel at firstname.lastname@example.org.
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